TMI Blog2023 (6) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... er cannot be held to be erroneous. As in Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT ] held that in order to invoke section 263, the assessment order must be erroneous and also prejudicial to revenue, and if one of them is absent, i.e., if the order of the Income-tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 of the Act. Since both the conditions for invoking the provisions of section 263 of the Act are not satisfied in the present case, therefore the impugned order passed by the learned PCIT under section 263 of the Act is quashed - Decided in favour of assessee. - ITA No. 1001/Mum./2023 - - - Dated:- 28-6-2023 - Shri Prashant Maharishi, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Ishraq M. Contractor For the Revenue : Shri Manish Sareen ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 20/03/2023, passed under section 263 of the Income Tax Act, 1961 ( the Act ) by the learned Principal Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety would be eligible for 80P deduction. 6. The Ld. PCIT-17 in her 263 order has neither rebutted nor countered several decisions of the courts wherein it has been held that section 80P(2)(d) is independent of section 80P(4) and that there is no bar on a co-operative society to claim deduction under section 80P(2)(d) of the act on interest income derived from another co-operative society. Investment in co-operative banks is to be treated at par with investment in co-operative societies for the purpose of deduction under section 80P(2)(d) of the act. 7. The Ld. PCIT-17 erred in law as well as on the facts of the case in relying on the decision of the Hon'ble Supreme Court In case of Citizen Co-operative Society Ltd. vs. Assistant Commissioner of Income-tax, Circle - 9(1), Hyderabad 84 Taxmann.com 114 (2017) even though the given decision is not applicable to the facts of our case. 8 . The Ld. PCIT-17 ought to have appreciated that the benefit of deduction claimed under section 80P(2)(d) has nothing to do with principal of mutuality and thereby the decision in case of M/s. Bangalore Club Vs. CIT quoted in 263 order is irrelevant and not applicable to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me earned by the assessee during the year under consideration and has also not applied his mind on the issue as was expected under the facts and circumstances of the case. Accordingly, the learned PCIT alleged that the assessment order passed under section 143(3) read with sections 143(3A) and 143(3B) of the Act is erroneous and prejudicial to the interest of the Revenue within the meaning of Explanation 2 to section 263(1) of the Act. 6. In response thereto, the assessee submitted that section 263 cannot be invoked in the present case, as the AO has made proper enquiry and verification of the claim of the assessee under section 80P of the Act. The assessee further submitted that the only issue for which the case was selected for scrutiny was to examine the claim of deduction under Chapter VI-A of the Act. The assessee also submitted that it provided complete details in respect of its claim of deduction under section 80P(2)(d) of the Act during the assessment proceedings and only after consideration of the details so filed by the assessee, the scrutiny assessment concluded at the returned income. 7. The learned PCIT vide impugned order did not agree with the submissions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the deduction claimed under section 80P of the Act. We find that the said notices were duly responded to by the assessee vide submission dated 17/12/2020, forming part of the paper book from pages 12-17. During the assessment proceedings, the assessee submitted that the only deduction claimed under Chapter VI-A is the interest earned from co-operative banks as per the provisions of section 80P(2)(d) of the Act. The assessee also submitted that the interest claimed as deduction under section 80P(2)(d) has been received from the co-operative banks, namely, Maharashtra State Co-operative Bank, Saraswat Co-operative Bank, and Shamrao Vithal Co-operative Bank, which are registered as co-operative societies. In this regard, the assessee furnished the confirmation of registration as co-operative societies received from the respective co-operative banks, forming part of the paper book from pages 41-46. The AO vide assessment order dated 06/01/2021 after considering the detailed reply filed by the assessee along with supporting documentary evidence accepted the claim of deduction under section 80P(2)(d) of the Act. However, the learned PCIT vide impugned order passed under section 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to invest or deposit its funds in one of the modes provided in section 70 of the aforesaid Act, which includes investment or deposit of funds in the State Co-operative Bank. Accordingly, the assessee kept the deposits in co-operative banks registered under the Maharashtra Co-operative Societies Act and earned interest, which was claimed as a deduction under section 80P(2)(d) of the Act. The learned PCIT found fault in the claim of deduction under section 80P(2)(d) of the Act on the basis that the co-operative bank is covered under the provisions of section 80P(4) of the Act. We find that the Hon‟ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. vs CIT, Calicut, [2021] 431 ITR 1 (SC) while analysing the provisions of section 80P(4) of the Act held that section 80P(4) is a proviso to the main provision contained in section 80P(1) and (2) and excludes only co-operative banks, which are co-operative societies and also possesses a licence from RBI to do banking business. The Hon‟ble Supreme Court further held that the limited object of section 80P(4) is to exclude co-operative banks that function at par with other commercial banks i.e. which lend money ..... X X X X Extracts X X X X X X X X Extracts X X X X
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